2015 (11) TMI 976 - AT - Service Tax

Claim of refund of penalty deposited earlier - Benefit of Section 73(3) for non levy of penalty - Failure to file ST-3 returns - Held that - Section provides that where true and complete details are available in the specified records which are admitted in the fact herein. Further, as required the assessee has deposited the amount of Service Tax in full as accepted by him, which is the same amount as determined vide the Order-in-Original and further admittedly the appellant have paid the interest under Section 75 as well as penalty equal to 1% of tax for each month for the period during the default was there and have also deposited penalty/late fee for delay in filing the returns. Further, it is found that no further tax is found to be recoverable from the respondent assessee. Accordingly, I find that the appellant is entitled to the benefit both under Section 73(3) as held by the learned Commissioner (Appeals) as well as also benefit under Section 73(4A) available in the provisions of the Finance Act, 1994 - respondent assessee will be entitled to refund of the penalty already deposited with interest as per rules - Decided in favour of assessee.

Summary

Issues:
1. Appeal against setting aside penalty under Section 78 by Commissioner (Appeals).
2. Contention of Revenue regarding penalty imposition.
3. Interpretation of Section 73(4A) of the Finance Act, 1994.

Analysis:

Issue 1:
The Revenue appealed against the Commissioner (Appeals) decision to set aside the penalty under Section 78 imposed on the respondent assessee. The Revenue argued that the assessee's delayed filing of returns and payment of Service Tax, despite having necessary information, amounted to a violation of the Act and suppression of facts. The Revenue contended that the onus was on the assessee to discharge the liability under the statute, and thus, the penalty should be reinstated.

Issue 2:
The Commissioner (Appeals) allowed the appeal of the respondent assessee, emphasizing that the case did not involve fraud or intent to evade tax. The Commissioner noted that the appellants had paid the Service Tax with interest before the show-cause notice, and the delayed actions were not deliberate attempts to evade tax. The Commissioner highlighted the appellant's bonafide belief regarding tax payment responsibility and lack of familiarity with tax procedures due to educational constraints. Consequently, the Commissioner annulled the penalty under Section 78, citing the benefit of Section 73(3) for the appellants.

Issue 3:
In the Tribunal's analysis, Section 73(4A) of the Finance Act, 1994 was crucial. The section allows for payment of Service Tax along with interest and penalty before the issuance of a show-cause notice if true transaction details are available in specified records. The Tribunal found that the appellant had fulfilled the requirements of Section 73(4A) by paying the full tax amount, interest, and penalty as determined, without any further tax liability. Consequently, the Tribunal upheld the benefits under both Section 73(3) and Section 73(4A) for the appellant, leading to the dismissal of the appeal and entitling the respondent assessee to a refund of the deposited penalty with interest.

In conclusion, the Tribunal's decision aligned with the Commissioner (Appeals) findings, emphasizing the lack of fraudulent intent or suppression of facts by the respondent assessee. The legal provisions of Section 73(4A) played a significant role in determining the appellant's compliance and entitlement to penalty refund, resulting in the dismissal of the Revenue's appeal.